Unison accuses Harrogate NHS Trust of scheme to avoid paying tax

Hollie Bone

Harrogate District NHS Foundation Trust has been accused of attempting to avoid tax by setting up a commercial arm to run its estates and facilities.

The Trust revealed plans to set up a wholly-owned subsidiary company in November, to run a number of its non-clinical services such as portering and catering.

But now the county’s lead for UK trade union, Unison, has suggested the proposals are a way for HDFT to avoid paying VAT.

North Yorkshire’s Area Organiser for Unison, Sarah Keig, said: “By setting up this company they will no longer have to pay VAT on purchases they make, so equipment, that sort of thing.”

Ms Keig said that NHS Trusts and service providers had already received a warning from the Finance Director at the Department for Health, who wrote to them in September to warn about tax evasion schemes in the NHS.

She said: “In September of this year he wrote to all Trusts within the UK saying we know what you’re doing, don’t do it, because whilst they are saving it means the Treasury are losing out and that means other services will be affected.

“I have sat in meetings with the directors and the Head of HR and I have said, morally, how can you do this, you are an organisation that is funded by the taxpayer and you are avoiding paying tax.

“They keep saying nothing is happening to our members but this is happening all over the country. Barnsley have already gone over to this new model and within weeks they have already made some big changes.

“We see this as the beginning of backdoor privatisation of the NHS, if they go ahead with this we think it is the beginning of the end.”

Robert Harrison, Chief Operating Officer at HDFT, said: “The need to explore opportunities for efficiencies, improved productivity and potential income generation across Health and Social Care estate is one that is being driven both locally and nationally.

"For some support services, in some NHS organisations and some local authorities, this has resulted in outsourcing. The Trust has not taken the outsourcing route on any significant scale or for any patient facing services.

“An Alternative Service Delivery Model allows an NHS Foundation Trust such as ourselves to establish a wholly-owned subsidiary company to deliver a range of managed services.

"These wholly-owned subsidiaries have become more common across the NHS as an alternative to outsourcing or privatisation. This approach allows quality and efficiency benefits to be achieved while retaining any financial gains within the NHS for reinvestment in patient care.

“This arrangement brings with it financial benefits for the Trust, which means we are better able to remain financially sustainable and continue to provide high quality services for patients in the Harrogate district.

"In addition, we can bid for grants that we’re not allowed to do now as an NHS organisation; and the company is also able to obtain 20 per cent of its business from elsewhere, potentially bringing in extra income into the NHS.

“On transfer, current staff will retain their NHS terms and conditions, or if they prefer, they can choose to move to new terms and conditions offered by the company.

"The new company will be modernising pay, terms and conditions for new staff, which will ensure that it is competitive in the employment market. The Trust has historically faced challenges in its ability to recruit to certain roles within estates and facilities as nationally-agreed terms and conditions and salaries are not competitive when compared to other industry.

“We recognise that this is a time of change for staff affected, and we are continuing to involve them and consult with them, and union representatives, throughout the process.”